I know why you're having trouble!
You have the "disable BBCode" box checked in your posts. When you go to write your next message or post your next picture, make sure you look beneath the message field and find the box that reads "disable BBCode in this post" and uncheck it.
Here's a screen shot to show you where the box is that should be unchecked:
See it? It's right below the message field.
That will solve the problem you're having.
FTR, IMG tags will work whether they're in uppercase or lowercase, as long as you have BBCode enabled when you post.